The Company Town (16 page)

The company built hundreds of new housing units—with whites segregated from Mexicans by neighborhood—a swimming pool, a playground, a fifty-two-bed hospital, and a baseball diamond. It also constructed a new crushing plant, smelter, and power plant. By the war's end, the company had spent $42 million on Morenci, which was becoming one of the most prominent company towns in the West. When some corporations were dumping their company towns—mining rival Kennecott, for instance, would sell its eight Arizona towns during the 1950s—Phelps Dodge seemed ever more committed to its wholly owned communities. In unincorporated Morenci, the company operated everything from the utilities to the bakery, and the mine superintendent hired teachers and other municipal workers and functioned as the town's mayor.
⁴⁶

As the second-largest U.S. copper producer, Phelps Dodge at mid-century appeared to have moved beyond the rowdy ways of its youth, including its penchant for confrontations with labor. Its operations were as far-flung as Peru and the Philippines. Ajo, Arizona, would be perhaps the most carefully planned of its U.S. sites, with an Anglo sector that contained such public facilities as a company store and movie house and separate neighborhoods for Mexicans and American Indians. But strikes continued to be a regular feature of company life: In 1967, an industrywide walkout shut down production. Every three years thereafter, hard bargaining that often included a brief strike ended in a union contract. In these, there were no violent confrontations and no management attempts to evict or replace strikers. Phelps Dodge commonly shut down operations, using walkouts as occasions for retooling. Even more noteworthy,
strikers continued to receive credit at the company store, where a purchase-rebate system provided a form of profit-sharing to many. (Phelps Dodge Mercantile also managed the company's scrip system, known as “merchandise coupons.”)
⁴⁷

In the 1980s, copper prices again fell, and Phelps Dodge laid off 100,000 salaried employees and furloughed its entire mining, smelting, and refining workforce. After five months, half of these employees were back at work, but management's impulse to return to the days of labor confrontation and union-free operations was strong. In 1982, CEO George Munroe—a soft-spoken product of Dartmouth College, the Boston Celtics, and white-shoe law firm Debevoise & Plimpton—toured Ajo, Douglas, Bisbee, and Morenci, where he held a series of meetings with miners reminiscent of John D. Rockefeller Jr.'s 1914 visit to Colorado. But Munroe's message was not exactly conciliatory: After describing the low wages of South American copper miners, he called for “a substantial and immediate decrease” in U.S. miners' remuneration.

The following year, 1983, other copper companies, including Kennecott and Magma, settled with unions on hard-times terms that stipulated no wage increases outside of cost-of-living agreements. Phelps Dodge, though, refused to go along with even this, calling for cuts in pay and concessions in benefits. When its thirteen unions—led by the Steelworkers, which had subsumed the Mine, Mill and Smelter Workers union—went on strike in June, the company continued operations in Morenci. At first, it depended only on supervisory personnel, but in August it urged strikers to cross their own picket lines and began hiring permanent replacements for all who stayed out.

A near riot resulted. In a frightening confrontation, 2,000 demonstrators took on state troopers near the plant gate and threatened to overturn a bus of strikebreakers. Arizona Governor Bruce Babbitt got the company to agree to a brief moratorium on hiring replacement workers, but with federal mediation making no progress, in mid-August Phelps Dodge again began hiring—this time, aided by the arrival of the Arizona National Guard and hundreds more state troopers. Ten strikers were arrested and charged with felony rioting. Gradually, more and more replacements crossed the line, and the smelter resumed something like regular operations. Within months, the company announced
that it was curtailing hiring, having recruited an entirely new and nonunion workforce.

The Arizona events would provide the template for successful union-breaking tactics that would be replicated at numerous U.S. companies. “Greyhound followed us and used our techniques,” reflected Richard T. Moolick, company president and architect of the antiunion campaign at Phelps Dodge. A former geologist and product of the Southwest, the abrasive Moolick evinced none of the Ivy League and Wall Street graces that had eased Munroe's way into the corporate suite. “Suddenly people realized, hell, you can beat a union,” Moolick went on. “We demonstrated that nobody was invincible.” Other imitative corporations came to include Continental Airlines, the
Chicago Tribune
, Hormel, International Paper, Eastern Airlines, and Caterpillar.
⁴⁸

In 1985, with replacements constituting the entire workforce, Phelps Dodge workers voted to decertify their unions. The company had long since reclaimed its worker housing, evicting strikers during Thanksgiving week of 1983 and cutting off their medical benefits. Phelps Dodge's Arizona operations were now completely union-free.
⁴⁹

Momentarily, copper appeared to be a terminally sick industry, with slumping prices along with less expensive and government-subsidized operations abroad putting a squeeze on U.S. companies. In 1985, the
Wall Street Journal
predicted that the U.S. industry would “be transformed permanently from a major world supplier to a marginal producer.” Nevertheless, Phelps Dodge, which had ended smelting in favor of lower-cost chemical-extraction and electrolysis processes, announced a return to profitability one year after its strike. And contrary to the doomsayers' forecasts, by 1990 prices had risen and the company's net income reached $455 million, on sales of $2.6 billion.

Prices would fall drastically again in the late 1990s, nearly double by 2004 thanks to demand from China's electronics and construction industries, then fall again in 2007, perhaps guaranteeing the takeover of Phelps Dodge by the smaller Freeport-McMoRan. That deal delivered the town of Morenci and other Arizona properties into the hands of new managers. The new company's 2008 annual report announced a 50 percent cut in production in Morenci, and in January 2009, some 1,550 workers—half of the town's labor force—were laid off.
⁵⁰

What lies ahead for the town of Morenci, with its 1,132 company-owned houses, twenty-room Morenci Motel, and Merc general store? More of the same, as demand for copper waxes and wanes? Although it's overlooked by many observers of the U.S. economy, Morenci offers solid testimony to the enduring presence of the dystopian company town in America.

Meanwhile, less than three hundred miles from the Appalachian coal region, a separate company-town tradition emerged in the late 1800s and lasted into the late twentieth century: the textile towns of the Piedmont region, which runs from North Carolina down through Georgia. Some textile towns would outlast many coal towns and perhaps make an equally lasting mark on American culture. They were not as totalitarian as the coal towns—but neither might they be held up as the quintessence of the democratic American way.

—A Carolina textile mill manager in the 1920s
¹

 

 

 

 

H
e was just folks: a small, “round, ruddy-faced man with an arthritic limp who wandered the cavernous textile mill in a work shirt, back-slapping and jawing with workers,” in the words of one southern journalist. In formal portraits, he was a stolid and bespectacled figure in an off-the-rack business suit—seemingly a Rotarian bore you would never want to be seated next to at a dinner party. But he could be ferocious: In the 1930s, he stormed into Washington and, before a congressional committee, railed bitterly against New Deal “unjust economics dreamed up by a bunch of jackasses.”

He was not a man of culture or even much learning, having dropped out of Davidson College at age nineteen to take a job as an executive in his father's mill. Although his white-columned home in Concord, North Carolina, was spacious, it would be the envy of none of today's hedge-fund billionaires. Clearly this was a man for whom the textile industry and work were everything.

Such was his power in the near-feudal fiefdom of Kannapolis, North Carolina, that the
Wall Street Journal
once likened him to Monaco's Prince Rainier. When the workers at Cannon Mills dared to go on strike, he got the governor to call in state troops to break the walkout and starved them into submission. “There was never a hint at compromise,” in the words of one historian.
²

But Mr. Charlie, aka Charles Albert Cannon, president of Cannon Mills Co. and the force behind the town in its glory years, was a benefactor in his way: Kannapolis was no backwater burg for cotton-mill rats. Along with its 1,600 tidy clapboard millworker houses and seven textile mills, the town was home to the company-funded Cabarrus Memorial Hospital, the Cannon Memorial YMCA, and the
Daily Independent
, owned by the Cannon family. With a population of 36,000 in the 1970s, Kannapolis was the largest unincorporated town in the state.

All normal government functions—including utilities, police and firefighting, street maintenance, and trash collection—were within the purview of Cannon Mills. In this, it resembled the Appalachian coal towns that were, after all, only a few hundred miles away as the crow flies. Kannapolis, though, lacked the prison-camp attributes of the coal towns and more resembled the benevolent despotism of a Lowell or Pullman, albeit less luxuriously. Not exactly a utopia, Kannapolis was a tad like Scotia insofar as isolation made it a universe unto itself. Moreover, some profitable companies have made a practice of sharing their bounty with the hired help—but that wasn't Cannon's way, or for that matter the custom in the scores of southern mill villages across the Piedmont region. Not that Cannon Mills was short of bounty that it might have shared: Charles Cannon built the company into THE LARGEST MANUFACTURER OF TOWELS IN THE WORLD, as a massive illuminated sign atop the company's Mill No. 1 declared.

The mantle of company leadership descended on Charles in 1921, upon the death of his father and Cannon's founder, James William Cannon.

James Cannon started building his manufacturing empire in the late 1880s. A decade earlier, the blond, brown-eyed former errand boy for a Charlotte grocery store had, along with his brother David and two others, founded a general merchandise store in Concord, a town twenty miles northeast of Charlotte that had been home to cotton mills since the 1830s. This was a simple country store, and they were simple, rural people: James and his wife, Mary Ella, the daughter of a miller, rode around Concord in a small mule-drawn wagon, their bare feet hanging from the buckboard. Nevertheless, like many merchants, James soon branched out into buying cotton, and by 1888 he had a 4,000-spindle mill employing eight hundred hands. By 1892, Cannon was operating a second mill, at Cabarrus, and further plants followed in China Grove, Albermarle, Salisbury,
and Mt. Pleasant. David became the president of the company, and James, who bought the cotton and raised the capital, served as treasurer.

At first, Cannon produced only yarn, but the company soon began to sell its own much-sought-after cloth—Cannon cloth—used to make clothes.

In 1906, James, who had become president of the company, approached textile engineer Robert Dalton of the leading engineering firm of Stuart W. Cramer Co. “Meet me at Glass,” he told Dalton, referring to a whistle stop on the Southern Railway near Concord. Cannon had purchased six hundred acres of land there, and he had plans to build a new kind of textile mill—a terry-cloth towel factory, the first in the South. Cannon had made flat-weave towels in Concord, but the new plant would help popularize the absorbent fabric: Up to that time the rich had used linen towels, and poor folks resorted to flour sacks.

Dalton drew up blueprints for the buildings and figured out what machinery would be needed. He helped Cannon arrive at $75,000 as the necessary capitalization. Cannon amassed the sum from his own savings and by turning to investors in Boston and Philadelphia. And he began constructing what would soon be named Kannapolis, home to a modern, electricity-driven cotton mill and a growing collection of millworker houses, which surrounded the mill in a circle. A five-room schoolhouse and a two-story, white-columned YMCA were completed in 1908.

Unlike, say, George Pullman or Milton Hershey, Cannon seemed to have few grandiose plans for Kannapolis. The construction of Piedmont mill villages dated back to the antebellum years, and he was likely just following established custom. In most such places, there would be a few houses, a little school, a small church, the mill, and the residence of the owner-manager. Kannapolis would end up being so much more than that. But in the main, James Cannon was responding to what was a sheer necessity. In the words of one local newspaperman: “Mr. Cannon had to build houses, because the people coming in from farms to work in the mills had to have a place to live. They were broke. They didn't even dream about building houses.”
³

During World War I, more than 86,000 North Carolinians fought in Europe, in such affrays as the Second Battle of the Marne, St. Mihiel, and in the Meuse-Argonne, and more than 2,000 died of wounds or disease. The war meant windfall profits and expansion for Cannon, as
the government took all the towels the company could produce. One specialty product was the Patriot Cannon towel, emblazoned with the words TO HELL WITH THE KAISER.

James died of a stroke in 1921 after a two-week illness. At the time, he was the master of twelve mills that turned out 300,000 towels each day. The company employed more than 15,000 workers and enjoyed an estimated $40 million in annual sales.
⁴